The shadow minister quoted the faction’s slogan “better to break the law than break the poor” in a speech one Labour MP described as “unbelievable”.

Speaking at Labour’s women’s conference in Liverpool, Butler said: “Conference, we are in Liverpool where over 30 years ago the council stood up to Thatcher and said: ‘better to break the law than break the poor’.

“Councils today should not have to consider cutting funding for women’s refuges, a lifeline to the most vulnerable.”

The Trotskyist wing Militant launched a takeover of Labour-run Liverpool City Council in the 1980s and set an illegal budget which exceeded the council’s income and demanded that central government, headed up Margaret Thatcher, make up the shortfall.

The decision led to the party serving redundancy notices to council staff as a stunt to pile pressure on the government and saw the councillors removed from office.

At 1985 Labour conference, Kinnock made a famous speech facing down Militant councillors, telling them: “You start with far-fetched resolutions; they are then pickled into a rigid dogma, a code, and you go through the years sticking to that, out-placed, outdated, irrelevant to the real needs, and you end in the grotesque chaos of a Labour council, a Labour council, hiring taxis to scuttle round the city handing out redundancy notices to its own workers.

“I tell you – and you’ll listen – you can’t play politics with people’s jobs and people’s homes and people’s services.”

Butler, Labour’s shadow women and equalities minister, welcoming Militant’s tactics is therefore likely to be highly controversial as the party prepares to meet in the city.

One Labour MP, who was in the room for Butler’s speech, told HuffPost UK: “It’s unbelievable.”

Glenys Thornton, shadow Lords health minister and a former equalities minister also took aim at Butler on Twitter.

Great to be at Women’s conference, but am surprised that @DawnButlerBrent has just praised a Liverpool Council in the past that of Derek Hatton who issued redundancy notices to their own public sector employees, and failed to protect services too!

The bold declaration also sets Butler’s against the party’s current leadership.

Corbyn, shadow chancellor John McDonnell and shadow cabinet secretary Jon Trickett who in 2015 wrote to councillors advising them against illegal budget setting.

Corbyn’s policy chief Andrew Fisher appeared to defend Butler, however, underlining that the slogan was first used by former Labour leader George Lansbury during a 1921 rebellion against rate rises in London’s then poverty-stricken Poplar.